Bonds, rupee weaken as Fed tone sparks outflow concerns
The Hindu
U.S. central bank says interest rate increase likely in March
Indian bond yields spiked while the rupee struck a one-month low on Thursday on concerns of potential outflows after the Federal Reserve delivered a more-hawkish-than-expected update, saying a U.S. interest rate increase was likely in March.
The Fed also reaffirmed plans to end its bond purchases around the same time, calling time on a long phase of easy money. India’s benchmark 10-year bond yield rose 7 basis points to 6.73%, its highest level since December 19, 2019. Bond yields rise when prices fall.
So far in January, foreign investors have dumped $2.2 billion of Indian shares after having bought a net $3.76 billion in 2021. They had bought $23.29 billion worth shares in 2020 and $14.23 billion in 2019. They are still, net buyers of $575.35 million worth debt so far this month after having sold $3.66 billion in 2021.